President Barack Obama told an audience stocked with some of Wall Street's brightest luminaries that he wants them to join him in passing new financial regulation legislation, criticizing a “failure of responsibility” that stretched from Wall Street to Washington and “nearly dragged our economy into a second Great Depression."

"I believe in the power of the free market," Obama said in remarks delivered at New York's Cooper Union. "But a free market was never meant to be a free license to take whatever you can get, however you can get it. That is what happened too often in the years leading up to the crisis."

Obama's remarks came at a moment when Senate negotiators said they were getting closer and closer to a deal allowing the regulatory legislation to move to the Senate floor. The political momentum led some observers to predict the bill could pass — and be signed by Obama — by Memorial Day.

Both bills, he said, represent "significant improvement on the flawed rules" that are in place today, "despite the furious efforts of industry lobbyists to shape them to their special interests."

"I am sure that many of those lobbyists work for some of you," Obama said. " But I am here today because I want to urge you to join us, instead of fighting us in this effort."

Sitting in the third row as Obama addressed the audience were two executives squarely in the sights of Obama's administration: Goldman Sachs CEO Lloyd Blankfein and his number two, Gary Cohn.

The arrival of the Goldman duo, whose powerhouse Wall Street firm faces securities fraud charges from the SEC, heightened the drama of a speech.

Also in the audience as Obama spoke was Rolling Stone publisher Jann Wenner — whose magazine famously called Goldman Sachs a "great vampire squid wrapped around the face of humanity" in an article on the bank's vast influence last summer.

Wenner told POLITICO that Blankfein approached him before the speech began and said "I feel like I know you," mentioning the vampire squid article, which proved hugely damaging to Goldman's public image. Today, though Wenner said he doesn't think the phrase was overstated. "It met the case," he said, describing, as Blankfein schmoozed with audience members a few seats away, Goldman's "blood tentacles sucking money out of everything."

The Rev. Al Sharpton was also in the crowd, and told POLITICO that he and Blankfein chatted about growing up in Brooklyn, where the two men attended rival high schools. "It seems like we've been on rival sides for a long time," Sharpton said of Blankfein.

But Sharpton said he was pleased with Obama's decision to come to New York. "I'm glad he's here," Sharpton said. "He's doing what he said he'd do, despite the fact that so many on Wall Street contributed to his campaign."

In his remarks, the President also pushed back against GOP claims that the bill allows for more bailouts of Wall Street. "But what is not legitimate is to suggest that we’re enabling or encouraging future taxpayer bailouts, as some have claimed" Obama said. "That may make for a good sound bite, but it’s not factually accurate."

Obama made a pitch for several of the key items of the reform legislation.

On the "Volcker Rule," which would prohibit banks from engaging in certain transactions the president calls risky, Obama said, new restrictions would bring confidence back to the financial system -- which would be good for Wall Street. "By enacting these reforms, we’ll help ensure that our financial system – and our economy – continues to be the envy of the world," he said.

On the complex financial products known as derivatives, Obama said, that there are some legitimate uses of the instruments, such as for hedging business risk. Still, he said, the sector needs more transparency. "We want to ensure that financial products like standardized derivatives are traded in the open, in full view of businesses, investors, and those charged with oversight."

On the proposed new consumer financial protection agency, which would be housed inside the Federal Reserve, Obama said that customers too often suffered large losses as a result of abusive business practices. And he laid out a vision of what might happen once the agency was in place:" "Instead of competing to offer confusing products, companies will compete the old-fashioned way: by offering better products," he said. "That will mean more choices for consumers, more opportunities for businesses, and more stability in our financial system."

Obama closed by offering the bankers in the room a history lesson, quoting from a Time Magazine article from June of 1933 -- in which bankers said that the recently created FDIC created a "monstrous system."

But the FDIC, Obama said, became "an institution that has successfully secured the deposits of generations of Americans."